Gog.org.nz

We’re in very deep doo-doo now, and anyone who doubts it need look no further than at a few days’ worth of old newspapers. The first “in-your-face” sign of really serious nationwide trouble came when Air New Zealand announced 100 air crew job losses, based in Auckland. Nothing was said about London-based staff who run the trans-Atlantic and Asian routes that still have substantial business-based passenger demand.

It’s the flight between us and Los Angeles or Hong Kong that poses the problem, because nobody’s coming down here from there. That is not surprising, when many Americans are wondering where the next buck is coming from, China is experiencing “interesting times” and Europe is sinking rapidly. In the UK alone, more than 5000 jobs are being lost every single day.

Air New Zealand already knows what the rest of us have yet to experience: next year is going to be an utter disaster for New Zealand tourism. Britain’s Labour Government, for example, has just imposed massive airport departure taxes (though it didn’t do such a great job on halting illegal arrivals), as it also madly prints money to stave off economic catastrophe. Its hopeless finance minister has also reduced sales tax from 17.5 percent to 15 percent (expecting a rush of consumers eager to save £2 on every £100 spent), raised national debt above £1 trillion, and increased the top rate of income tax to 45 percent. It would make more sense to invite experts from countries such as the Cayman Islands and Somalia to the top table at international financial summits like the one held in Peru last week. At least we might get some idea about how the pirates stole all our money…

Meanwhile, many a new-age New Zealand dairy farmer will be wondering if all that borrowing for the conversion was worthwhile, now that commodity prices are heading deep beneath the long-drop, and Fonterra warehouses are holding surprisingly high unsold stocks. Some may already be considering reconverting to walnuts, or peanuts or macadamia nuts, because clearly, everything’s suddenly gone nuts.

But in true bunker mentality-style tradition, the full scale of what is about to happen still hasn’t sunk in here – thanks to our primitive tribe of journalists; you know, the people we rely on to keep us well-informed. Many an expert warned them over the last five years that the false credit-driven boom was bound to end in tears. They paid no attention, comprehensively failing to examine the dangers. Instead, they swooned and headlined over such unexpected “prosperity” and gasped at monthly statistics showing house prices soaring towards the stratosphere. New Zealand journalists are fascinated by fashion, cringe art and statistics and always report them meticulously. It’s a good excuse for not investigating issues, and all those puzzling numbers usually make people feel somehow more secure. Not any more, though… they’re just frightening.

So how has the media more recently responded in the face of what’s certain to be a catastrophe for hundreds of thousands of New Zealanders?

As usual, poorly.

This country floats on an ocean of baffling statistics. But so far into this crisis, not one journalist has yet figured out and told us how much a 1 percent increase in jobless will cost in benefits or how that could be paid for (and apparently, not a single politician has done the sums, either). Meltdown has been staring us in the face for almost a year and yet, so far, there is no sign of any hard strategy – and no hard questioning by the media.

Instead, for example, the Dominion Post devoted an entire BusinessDay front page to a non-story about the future of Wellington, now that the boom in bureaucrats and inflated rental property is over. Its reporter spent a lot of space discussing past vibrancy, arts, caffs and good times, lamenting the halt in recruitment of red-tape merchants, but gave no clues as to the future – apart from the fact that it will be bad, which the rest of us already know. Wellington may be bursting with talent, but there was none on hand to give even a fragment of useful advice. This was indeed another headline that required no reading of the story beneath.

On the other hand, Infometrics director Andrew Gawith was allowed half a page in the DomPost’s Business Day section on November 15. His sobering thoughts should have been promoted to the newspaper’s front page. Gawith graphically illustrated just how similar this country is to Iceland, whose capital is no longer Reyjavik, but is now about $4.50. That’s thanks to an almost identical pattern of amassing foreign consumer-driven debt that, when called in, Iceland was unable to meet and was declared bankrupt.

We have very similar financial obligations, and so far no New Zealand journalist or politician has offered any news as to how they will be met. We are delinquent borrowers of foreign money, and today it is much harder to roll over the credit. Now that global commodity demand has slumped, we cannot export our way out of trouble, either.

Gawith observes that, like Iceland, we were allowed to amass a huge foreign debt, when the lenders knew full well that we lacked the brains to use it to lift our export earnings and GDP. Instead, we wasted it on houses, boats and foreign holidays.

Prepare for an unpleasant Christmas, and it should not come as a surprise. If you are up to your eyes in debt, next year will be painful. But if you ignored the blandishments of now-disgraced and ruined finance companies, stayed away from Harvey Norman’s eternity of free credit and kept hold of your money instead, now is a great time to buy that flash car or boat. It’s a cash buyer’s market.

In 2009, cash will be king, and credit cards will be what they always were: Crap.

---

---